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Russia Prepares to Join the WTO

23 July 2012

Mayer Brown Legal Update

Following the parliamentary vote on the WTO Accession Protocol, on 21 July 2012, Russian President Vladimir Putin signed the ratification bill and submitted it to the WTO Secretariat. As a result, Russia will become a WTO Member on 22 August 2012.

Customs Tariff

Although it is Russia that accedes to the WTO, the customs tariff applicable to imports of goods into Russia is that of the Customs Union of Belarus, Kazakhstan and Russia. On 20 July 2012, the Customs Union authorities adopted the new version of the Single Customs Tariff that should bring Russia in compliance with its WTO commitments on goods. The revised Single Customs Tariff also translates the Russian WTO commitments on goods based on the 2007 version of the Harmonized System (HS) nomenclature into its 2012 version. As a result, there will be divergences between the Russia’s commitments on goods, as posted on the WTO website, and their actual implementation, and business are advised to review their positions by reference to the newly adopted revision of the Single Customs Tariff.

Car Recycling Fees

Russia plans to introduce recycling fees for cars in 2012 (for more information, see our 25 June 2012 Legal Update, “Russia Set to Introduce Recycling Fees for Cars.”) President Putin is expected soon to sign a law that will introduce such fees as of 1 September 2012. In its final draft adopted on 18 July 2012, the law continues to require the payment of such fees upon importation of vehicles into Russia and to exempt from such fees vehicles manufactured by companies that undertake to ensure their further recycling. The law no longer limits its scope to categories M (passenger cars, buses) and N (trucks), and instead leaves the scope issue, as well as other implementation details, to the implementing acts of the Russian Government, due to be announced in August 2012.

Agriculture

On 13 July 2012 the Russian Government adopted the Agriculture Support Program for 2013-2020, which, in particular, takes into account Russia’s impending WTO accession. The total level of support is set at 2.2 trillion rubles (approximately USD 68 billion) and will take form of the income tax exemption as well as direct supports. The program demonstrates an intent by Russia to increase the use of various green box subsidies not subject to the WTO reduction commitments.

Other Measures

The State Duma decree ratifying the WTO Accession Protocol recommends the Russian Government to:

As of the accession date, introduce a quarterly monitoring of import flows and their impact on the volume of production and market share of the Russian goods, so as to swiftly consider measures to protect the domestic market;

By 1 October, prepare a plan for legislative reform in connection with the WTO accession;

By 1 January 2013, report on the implementation of support measures requested by Russian industry in the context of the discussion on the ratification of the WTO Accession Protocol.

If the United States does not grant Russia PNTR prior to Russia’s accession, the United States will have to continue to invoke non-application towards Russia’s membership, and Russia will presumably do the same. This means that the countries will not be obligated under WTO rules to meet their WTO commitments to each other, most particularly many of the commitments that Russia made as part of its accession agreement. Where that is the case, US companies will be at a competitive disadvantage to other companies.

However, there has been recent movement in the US Congress on this issue. On 18 July the Senate Finance Committee passed a bill granting PNTR to Russia by a surprising vote of 24-0. The House Ways and Means Committee will consider a similar bill this week.

While the legislation still faces difficult hurdles to quick approval, these recent actions have made it theoretically possible that Congress could approve this bill prior to its August recess. If that happens, President Obama could sign the bill into law, and grant Russia PNTR prior to their WTO accession on 22 August.

As in the case of Vietnam’s accession to the WTO, the United States would then disinvoke non-application (which the United States had to invoke upon the WTO General Council’s approval of Russia’s membership), and upon entry Russia and the United States would be obligated to provide each other will all of their reciprocal WTO commitments.

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